Idaho Falls, Idaho:
Would the social security system become solvent if all wages were taxed, like medicare, and not only those below $87,900 ?

Dennis Cauchon:
Applying the 12.4% Social Security tax to income above $87,900 (the current limit) would raise about $100 billion next year. It would reduce the program's unfunded liability by about half.Cape Neddick, Maine:
In your article,The Looming National Benefit Crisis," you state: "...that triggers a loss of confidence by investors in the U.S. economy. Foreign investors refuse to lend more money to the government to finance its deficits;"
To what foreign countries do we owe money and how much do we owe them?
Thank you,
Milton S. Davis, MD, Ph.D

Dennis Cauchon:
About $2 billion of the $4 trillion in publicly held federal debt is owned by foreigners. This portion has been increasing. Japan is the largest creditor.Fort Worth, Texas:
was social security originally established so that americans could have a guaranteed paycheck ...isn't social security something i have paid for to guarantee i will have money when i'm old?

Dennis Cauchon:
Social Security was created during the Depression to help the elderly avoid poverty. People today consider it like a pension -- they pay in while they work and take out when they retire. In reality, it's a pay as you go system: existing workers pay for existing retirees. Likewise for Medicare. The money you paid in Social Security taxes went into the checks of people already retired and the surplus went to pay for defense, education, etc. The problem is promised benefits far exceed expected income. The current benefit formula would basically require doubling taxes or cutting benefits in half to make the system whole.Tampa, Fla.:
I find the chart outlining individual costs to be grossly wrong in some case. I work for the Federal Govt. My husband is 11 years older than me. He is permitted to stay on my insurance plan for as long as I work. So, if I work until 62 - he will remain on my medical insurance plan until age 73. Then he will start Medicare. Estimated costs per family should be adjusted for situations such as this.

Dennis Cauchon:
Good point. The calculator is an estimate and can't take into account every circumstance. In your case, your husband's Medicare benefits may be delayed because of your federal health insurance. But the bottom line is little changed. Federal taxpayers will still be covering his and your medical expenses. And federal pensions, which you will receive, are unfunded to the tune of $3.9 trillion, or $34,630 per household. The federal pension program is very generous compared to private pensions. Many private pensions have unfunded liabilities, too, but in accounting terms, federal pensions are in worse shape -- except they are back ed by the full faith and credit of the government.Manassas, Va.:
Not a question, but a simple fix as in any business. The Fed. Gov. simply adjusts its expense areas, reduce illegal aliens' cash outlays and money to going overseas to thankless countries. Charity starts at home with the tax payers that provide the government with the money they waste by supporting illegal aliens and heads of foreign countries that only take our money and don't do anything with it to help their people.
We have plenty of money to support our own and those retiring.

Dennis Cauchon:
Reducing money spent on illegal aliens and foreign aid wouldn't make a dent in the problem and might make it worse. Immigrants would provide a boost, at least short-term, to the system by providing more workers to pay for retirees. Social Security makes three assumptions -- rosy, intermediate and pessimistic. I used intermediate as everyone does. In its intermediate assumptions, it assumes 900,000 (legal and illegal) immigrants a year. In its pessimistic assumption -- meaning the system is worse off -- the number of immigrants is about 600,000. In its rosy scenario, immigrants are about 1.3 million.Phoenix:
Wouldn't it be more logical to resolve the nation's medical problems by having national health insurance for all citizens both retired and nonretired?

Dennis Cauchon:
AARP and others make the point that the high cost of Medicare is a reflection of what's happening in the entire health system. It's hard to predict what approach might actually happen.Olathe, Kansas:
Do you see the USA hitting the 'debt wall' like New Zealand did in the mid 80's? If that happens what do you perceive would be the economic impact not only here but world wide.

Dennis Cauchon:
Boston University economist Lawrence Kotlikoff basically invented the idea of generational accounting -- measuring how much debt one generation passes to the next. He believes the U.S. is heading for a big crash when the credit dries up. He cites many examples of countries -- Brazil, Russia, etc. -- that this has happened to. His new book, The Coming Generational Storm, is well worth readingn for an assessment of the potential consequences. Most economists think a depression is possible, although they disagree on its likelihood.Atlanta:
I can't understand why we cannot do something to stop rising insurance costs for doctors. My medical bills are unreal. Yes, the doctor makes plenty, but I can't help but feel that attorneys are the real culprits in our looming national financial crisis. Attorneys, like the one running for VP have made millions off of poor people. Granted if a doctor makes a bad choice, he should pay, but so many people will sue over anything...and their attorney is smiling all the way to the bank. This in my opinion is hurting Americans. Is there anything we can do?

Dennis Cauchon:
Medical malpractice lawsuits are an important issue. However, the amount involved is small compared to the $30 trillion unfunded liability of Medicare.Sioux City, Iowa:
Right now Social Security Payroll Taxes are only taken out of income up to $87,900. Why not just tax all income for the Social Security Tax Rate. Those making over $87,900 can certainly afford to pay extra and this increase in taxes might avoid having to raise the amount lower-income workers pay in. Why is this solution never offered?

Dennis Cauchon:
I write about this proposal in today's paper and gave the numbers on what it would raise above. The political problem, of course, is that tax hikes are very unpopular.Comment from USATODAY.com Host:
Please stand by ...Temperance, Mich.:
The burden has always been on the worker. I have been paying in for 42 years and many of those I have maxed out. I would venture it is over $100,000. I'm just one person.Where has that money gone? Has it gone to those who did not contribute or to waste?

Dennis Cauchon:
Social Security and income taxes basically all go to the same place -- total federal spending. The money covers the deficit, the war in Iraq, welfare, highways, etc. My stories are not really about how we tax or how we spend our money. They are about scorekeeping: total income vs. total spending. How to balance the two is a political question that people disagree on. But there's no way to dispute we are spending and promising way more than we plan to collect in taxes.Washington, D.C.:
Do you think the debt will figure in this week's debates?? Will anyone ever have to confront it during the campaign?

Dennis Cauchon:
I hope so. The deficit and the debt has been the subject of some discussion in the campaign. The debt is $4.3 trillion, equal to $38,000 per household. The deficit is $422 billion this year. But it's hard for any politician to be frank when his or her competitor is promising a free ride. Voters, quite naturally, like low taxes and high spending. Witness California where voters repeatedly use initiatives to cap taxes and mandate spending.Silver Spring, Md.:
Do you get the feeling anyone really wants to make a move on the debt? Or are they quietly willing to let their children get hit by the bus?

Dennis Cauchon:
I think there is a lot of concern. Conservative talker Joe Scarborough has a new book out, Rome Wasn't Burned in a Day, on the topica and Pete Peterson, a longtime deficit hawk (and nice writer) has a book out that recently made the best seller list. In Congress, Sens. Joe Leiberman and John McCain have been vocal on the problems, as have others. Interestingly, the government has cleaned up its accounting greatly in the last 10 years -- a big step forward. Basically, Congress has ordered that it be given an accurate accounting of the federal government's financial situation. I couldn't have done my stories without this improved accounting. But the next step -- doing something -- is a lot more painful than getting the diagnosis.Washington:
I'm 24. Any ideas on what the debt will have reached by the time my generation gets there? I mean, God love you boomers, but it sounds like you folks are gonna get the last drops of the system.

Dennis Cauchon:
Young people say in polls that they are not counting on Social Security or Medicare. But their behavior -- bad saving habits -- show otherwise. The Medicare and Social Security systems cannot survive the next 40 years as they are. It's a matter of mathematics, not politics. The first question young people have to ask is will the economy be damaged, and to what extent, by the again of society and decades of fiscal imprudence.Texas:
The people I know are far more focused on the Medicare issue than any of the current debate topics. Is there a way to force the candidates to address the real issues?

Dennis Cauchon:
I'm interested to see if it comes up in a presidential debate. The problem is the presidential candidates know that there is little advantage in saying, hey, we're going to have to raise taxes or cut spending (on the most important voting block). Experts on the issue say, and I suspect they're right, there needs to be an unofficial truce that discussion is allowed. It's happened before, notably when Alen Greenspan headed a Social Security reform commission in the 1980s.McLean, Va.:
What made you decide to pursue this story in such depth? Just general interest or personal experience?

Dennis Cauchon:
As a former business reporter, I've known this was a story for years. But I decided to propose the story while staying at a low-rent hotel covering a flood in Pennsylvania. On C-span, I saw David Walker, head of the General Accounting Office, giving a speech at the National Press Club. I had never heard a government official talk so bluntly about the problem. I kept saying, "Whoah! He can't say that, can he?" Walker is the nation's chief accountant and appointed to a 15-year term. I said now's the time to do the story. Go to the GAO web site for outstanding material on the issue. By coincidence, it's become a cause celebre in the last few months among the leading financial minds, especially Fed chairman Alan Greenspan, who has been talking bluntly (in his own obscure way) about the problem.Los Angeles:
Why do you think national debt isn't a big topic in the election? Is it because neither Kerry or Bush has an answer to the problem or else the answer is too grim? Why isn't the media asking about it? Same reason? Just skirt it under the rug and let the next generation deal with it?

Dennis Cauchon:
The presidential campaign is about being elected president. If you were campaign manager, would you advise you candidate to say Medicare and Social Security cannot survive as we know it? The truth is, this subject has been well-reported, well-researched and throroughly documented. But it's kind of a bummer. I hope moving it from the editorial page to the front page can popularize the issue a bit.Knoxville, Tenn.:
I guess we've dug ourselves a big hole with OASDI. No magic for filling it either. I would like your comments on the following way of dealing with the OASDI part of Social Security in the future. Let's take the population under say 40 or 45 years of age and issue them government (i-bonds?) for the amount they have contributed to date (including interest) and have that age group continue buying bonds with the rest of their contribution (and most of their employer match - use bit to help pay down the existing SS debt). Allow them to (optionally) annuitize their total contribution at retirement (Private sector function???). Continue paying as is for those older people. It doesn't solve the problem of the debt we've accumulated, but at least it doesn't dig the hole any deeper than it is. Plus it gives Americans real assets that they can accumulate. I've always felt the biggest problem with capitalism is that there are not enough capitalists. Giving Americans a real asset can get them started accumulating wealth, which in capitalism is the key to success. Your thoughts...

Dennis Cauchon:
If I understand your proposal correctly, it basically calls for privatizing Social Security for younger workers and taking them out of the system. The liberarian Cato Institute has been a leader in developing proposals along these lines. President Bush supports a more modest plan to let workers divert some Social Security taxes into private investment accounts in exchange for reduced future benefits. As you know, these private accounts are controversial and the details are crucial.Royal Oak, Mich.:
How far off do you think the option of not being a part of the social security system is? I'm 26 and would be more than willing to give up any benefit if they stop taking the tax out of my paycheck. Plus, they can keep what I've put in so far!

Dennis Cauchon:
It's impossible to predict the future, but I'd say it's likely that some form of private retirement accounts will occur. That means individuals could divert some of their Social Security taxes to a private account in exchange foro reduce future benefits. The theory is that the historical returns of the stock market (10-12%) would make it a better deal for individuals than SS while at the same time reducing the burden on the government. However, private accounts do transfer risk to individuals. Also, in the big picture, diverting SS taxes costs money in the short term but doesn't save money for about 30 years. That's a problem for a cash-strapped, pay-as-you go system. On the other hand, if we don't think long-term, we'll never fix the problem. Most private investment proposals reduce SS taxes by $50 billion or more per year. Long-term savings will far exceed that lost but they don't come for 30 years.Algonac Mich.:
Where is my incentive to continue paying for SS and Medicare if I won't benifit?

Dennis Cauchon:
One incentive might be that you will be arrested and imprisoned if you stop contributing. That's the wonder of taxation.